1) Assume the market for tortillas is perfectly competitive.The market supply and demand curves for tortillas are given as follows:

supply curve:

P = .000002Qdemand curve: P = 11 - .00002Q

The short run marginal cost curve for a typical tortilla factory is:

MC = .1 + .0009Q

a. Determine the equilibrium price for tortillas.

b. Determine the profit maximizing short run equilibrium level of output for a tortilla factory.

c. At the level of output determined above, is the factory making a profit, breaking-even, or making a loss?Explain your answer.

d. Assuming that all of the tortilla factories are identical, how many tortilla factories are producing tortillas?

2. The market for wheat consists of 500 identical firms, each firmwith the total and marginal cost functions shown:

TC = 90,000 + 0.00001Q2

MC = 0.00002Q, so each firm's supply equationis given by Q = 50,000P

where Q is measured in bushels per year.

The market demandcurve for wheat is Q = 90,000,000 - 20,000,000P, where Q is again measured in bushels and P is the price per bushel.

a. Determine the short-run equilibrium price and quantity that would exist in the market.

b. Calculate the profit maximizing quantity for the individual firm.Calculate the firm's short-run profit (loss) at that quantity.

c. Assume that the short-run profit or loss is representative of the current long-run prospects in this market. You may further assume that there are no barriers to entry or exit in the market.Describe the expected long-run response of firms to the conditions described in part b.

3) An economist at the university estimates the demand and supply curves for student housing in a university town as:

QD= 5600 - 8PQS= 500 + 4P,

where P = monthly rent, and Q = number of apartments available for rent.For purposes of this analysis, apartments can be treated as identical.

a.Calculate the equilibrium price and quantity of student housing.

b.Calculate producer and consumer surplus at this equilibrium (sketch a diagram showing both).